It pays to be ethical

“There are some very real challenges to upholding ethical practice,” Tanya Barman, Head of Ethics – CIMA UK, said on meeting with senior HR representatives from leading companies on her recent visit to Sri Lanka.

While companies are tackling the issues as best they can, it is important to provide guidance and tools to support the individual in an increasingly intricate environment. “CIMA takes upholding the integrity of the profession very seriously,” said Barman at ‘Acting Under Pressure,’ a discussion forum held at the CIMA Sri Lanka Division, averring, “At the heart of what went wrong in the financial crisis was poor financial management and very poor ethical practice.”

At the forum, she revealed the findings of a recent CIMA report based on responses from 1,760 CIMA members and students who represented over 80 markets and worked in a range of finance functions from analyst to chief financial officer.

The report showed that 24% of respondents felt under pressure to compromise their organisation’s ethical standards when working with colleagues from different functional areas within the organisation. Of the 90 respondents from Sri Lanka, 41% felt that this was a challenge. 22% of those surveyed found that meeting reporting deadlines made acting ethically difficult (34% of Sri Lankan responses), and 21% indicated that dealing with customers put them under pressure to act unethically. Compiling management accounts and year-end accounts were also marked trials for Sri Lankans surveyed, with 39% and 38% respectively, claiming they felt pressure to sell out in these situations.

Barman reminded those present at the forum that they would be held accountable for failure to live up to professional ethical standards, while also pointing out that being ethical does indeed pay. (Research has shown that ethical business perform better than others, in a comparison of the world’s most ethical companies against the S&P 500 index.) She also pointed out that sometimes, after making every possible attempt to fix the problem, it is necessary to disassociate oneself from the wrongdoer.

She noted that in order to triumph over the temptation to behave unethically, it is important to make it real for people, and show them the consequences in a way that makes an impact on their own lives. To assist with this, participants at the workshop were given scenarios in which they were asked to decide what they would do when faced with a grey area, amongst them, an actual case study, in which the company lost US$ 4 billion due to unethical practices. Suggestions included demonstrating the financial cost of unethical practice to those concerned, and reiterating the importance of values.

As professionally qualified management accountants, the research shows that CIMA members and students play a central role in maintaining an organisation’s ethical standards by drawing on both their professional training and understanding of professional ethics, managing performance, ensuring risk assessment and supporting and driving decision making and offering constructive challenge and having an objective view of the organisation.

Many people want to do the right thing, but are unsure how to go about it.  This is where support from management as well as professional bodies comes in. The CIMA Code of Ethics is based on the International Federation of Accountants (IFAC) Handbook of the Code of Ethics for Professional Accountants, of the International Ethics Standards Board of Accountants (IESBA), ensuring consistency across the globe.

It holds CIMA’s members and students to the fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour, and can be viewed online or downloaded from the website.

In order to ensure that they understand what this entails and to clarify any questions, the CIMA ethics helpline is free to students and members.

 CIMA has also joined with Expolink to provide an anonymous and confidential service for individuals who are facing an ethical dilemma, in addition to the ethical checklist, which takes a step-by-step approach to thinking through a challenge that could compromise professional standards.

To access CIMA’s code of ethics and other resources, please visit www.cimaglobal.com/Professional-ethics/Ethics/ or call CIMA Sri Lanka division on 0112503880 for more information.